The Prison Industry Goes Global

Next September (2001) in San Antonio, Texas, the World Research Group and the Reason Foundation will host their Fifth Privatizing Correctional Facilities conference.

The hook for last year's event was “Grow Profits and Maximize Investment Opportunities In This Explosive Industry.” This year, the aim is to rebuild confidence in an industry that , in the US, has fallen afoul of Wall Street.

Stock prices in the leading companies have plummeted, affecting the availability of finance capital required for expansion. Also, anti-prison privatization sentiment is at an all-time high, with courts, legislators, citizen groups, organized labor, academia, and the media all scrutinizing the industry as never before.

In June, the state of North Carolina passed legislation preventing any private businesses from building “speculative” prisons with the hope of winning contracts to fill them later and banned companies from bringing in out-of-state prisoners. It also delayed for a year the construction of a new juvenile facility. And it decided to take over the management of two 528-bed private prisons that have been run by Corrections Corporation of America (CCA) since 1998.

Overall, the claimed benefits of prison privatization have not been proven. Private prisons – prisons on the cheap – have been characterized by staff shortages and inadequate programs for prisoners. Riots, escapes, and violence are commonplace. Prisoners and a guard have been murdered; guards have been indicted for sexual and physical abuse of prisoners; and contracts have been terminated for poor performance.

Also at issue is whether such a core function within the criminal justice system should be handed over to corporations, whose shareholders' interests come before the general public's, and whether corporations should be allowed to develop a long-term vested interest in shaping criminal justice policy.

The problems in the US mean that continued international expansion is crucial to the industry's future. But it is significant that September's conference will not be discussing how the World Trade Organization might assist with the industry's rebuilding process.

But then, does it need to?

Consider this: since 1988, the United Nations Sub-Commission on the Promotion and Protection of Human Rights has tried to initiate a study of prison privatization. But the subcommision has failed to win approval from its parent body, and the proposal has been consistently blocked, most recently by the US. In April 2000, the Organization of American States was called upon by Mexico to look into the possible advantages of privatizing prison services; meanwhile, on the other side of the globe, Kyrgyzstan has just passed a new executive code enabling private prisons to be developed. These moves are not unrelated and exemplify how industry lobbying works and how new markets are opened up.

So far, the handful of corporations targeting the global criminal justice infrastructure and services “market” have not needed to resort to the WTO to fuel their international aspirations. Since the early 1980s, prison operators have been able to cash in on the privatization tidal wave generated by the IMF, World Bank, USAID, international consulting firms, and free market-oriented think tanks. These have all supported corporations' need for new markets by calling for governments to get out of the “business” of running essential services and turn them over to the private sector.

The UK and Australia were the first easy pickings for private prison companies. Now, in the Third World and the emerging economies of Eastern Europe – where, arguably, some of worst prison conditions and human rights abuses exist – outside financial aid for new infrastructure is often tied to privatization of state assets and services.

So the prison firms have been strategically positioning themselves. Florida-based Wackenhut Corrections Corporation – now known as WCC – describes itself as “an industry leader and pioneer in the privatization of correctional facilities throughout the world.” So far, outside of the US, it has won contracts in Australia, the UK, South Africa, Canada, New Zealand, and the Netherlands Antilles.

WCC is owned by the Wackenhut Corporation, a security firm with operations in 56 countries on six continents. It offers "global integrated service solutions" and describes its international trading base as Central and South America, although recently it has established itself in Eastern Europe, Asia, and Africa.

WCC's main domestic rival, Corrections Corporation of America (CCA), has prison contracts in the UK and Australia. CCA's joint venture partner and a major shareholder is Sodexho SA of France, which has operations in 60 countries and offers “a whole world of services across five continents.”

The European security firm Group 4, which runs prisons and associated services in the UK and Australia, will soon open a 3,024-bed maximum security facility in South Africa. In May, the company announced a merger with Danish security firm Falck, creating a combined operation base of 50 countries.

Other firms, such as Britain's Securicor and, from the US, General Security Services Corporation, Management & Training Corporation, Correctional Services Corporation, and BI Inc. (which is big in electronic home security products) all have international aspirations.

With such global operations already in place, will these firms need the persuasive powers of the WTO to get a foothold in countries that may be reluctant to go the corporate-prison route?

In New Zealand, the Labor Alliance Minister for Corrections, Matt Robson, said in January that “there has been an experiment overseas – driven by ideology – to introduce private prisons, and it hasn't worked. The ideology-driven belief that ... private is better is not suited to our prisons, and this government won't let New Zealanders become guinea pigs for an experiment here.” Except for one contract, Mr Robson halted the previous administration's prison privatization plans.

Time will tell whether the WTO will play a role in that scenario or in others like it.

A WTO official said recently that there are regulations in place that would protect a country's correctional services from what he termed “liberalization requests,” in which the private sector can demand that a government open its services to competition.

But if the industry's expansion gets blocked by a country on ideological, ethical, or legal grounds, then according to Ellen Gould, a Vancouver-based independent analyst, there are a number of ways that private prison firms could “pry open” these new markets.

WTO regulations are a moveable feast and, ultimately, any interpretation of the rules rests with WTO dispute panels. If needed, the private prison operators will conveniently find that the panels exist to serve only one set of interests.